MIDDLE EAST: Arab Spring presages endgame for Egypt

by Joseph Poprzeczny

News Weekly, October 1, 2011

Egypt faces a fate far worse than war-torn Somalia, according to leading American financial and religious affairs writer David P. Goldman, who also writes under the pen-name “Spengler”. He warns that few appreciate how close Egypt is to economic and social collapse.

Goldman is a former senior editor of First Things, a New York-based ecumenical journal that seeks to create a “religiously informed public philosophy for the ordering of society”. He was previously research director at the Bank of America and at Credit Suisse. (See this webpage for details of his new book, How Civilizations End).

He writes that Egypt’s situation resembles that of Austria’s Habsburg Empire in August 1914 as it became embroiled in World War I, the cataclysm that would see its dismemberment by November 1918.

“Robert Musil’s Der Mann Ohne Eigenschaften (“The Man Without Qualities”), one of the great novels of the past century, is a portrait of the Austrian early in 1914,” Goldman says.

“The readers know that their silly world will come to a terrible end a few months later with the outbreak of war, but the protagonists do not….

“Arab politics today has a Musil-like quality of unreality, for the conclusion will be the collapse of the Egyptian state. The misnamed ‘Arab Spring’, really a convulsion of a dying society, began with food shortages.”

Goldman says that Egypt imports half its caloric consumption. Nearly half its population is illiterate; its university graduates are unemployable; its US$10 billion a year tourism industry is currently shuttered down; and its foreign exchange holdings are being depleted.

Goldman reports that reserves have slumped from $36 billion in February, when the so-called “Arab Spring” mass upheavals broke out in Cairo, to only $25 billion today. He says that he suspects the $25 billion figure has been “bloated by $5 to $10 billion of Algerian and Saudi loans and trade credits”.

Egypt’s central bank has warned that Egypt’s foreign exchange reserves now stood at a “danger level”, meaning the country could only cover six months imports.

Contrary to claims that food-price inflation has slowed, the Arab-language Egyptian media has reported that the price of staples such as rice and sugar has risen by 50 per cent or more since March. Egypt’s revamped military government is distributing bread and cooking gas.

“Egypt turned down a proposed loan from the International Monetary Fund earlier this year because the military government could not accept the conditionality attached to IMF money,” Goldman says.

“The Gulf States and the West may keep Egypt on life support, which would leave a large proportion of Egyptians in a limbo of extreme destitution. The fiscal collapse of Southern Europe (and severe problems elsewhere) makes this an inopportune time to come to the West with a begging bowl.

“As for the Gulf States: they are not even meeting their commitments to the Palestinian Authority, and can’t be expected to carry a $15 to $20 billion annual financing requirement for Egypt.

“It does not compute. Western economists can concoct all the economic recovery plans in the world, but a country that can’t teach half its people to read, and can’t produce employable university graduates, and can’t feed itself, is going to go down the drain.

“Nasser, Sadat and Mubarak kept Egypt under control by keeping most of its people poor, ignorant and on the farm, and by warehousing its youth in state-run diploma mills. After 60 years of such abuse, Egypt simply can’t get there from here.

“The result, I predict, will be a humanitarian catastrophe that makes Somalia look like a picnic. It’s not surprising that the Egyptian mob might attack the Israeli embassy.

“The Egyptian street has nothing to do but rise up against perceived oppressors, because nothing good awaits them; and the desperation that will follow the collapse of the Arab ‘Spring’ threatens every Middle Eastern regime, such that the rulers have to try to get out in front of the rage….

“What we are likely to witness during the next two years will be repellent, even horrifying – but not necessarily dangerous.”

Perth-based geopolitical analyst, David Archibald, this year delivered a lecture to the Washington-based Institute for World Politics focusing on the entire Middle East’s growing dependence on imported food, including Australian grain.

Like Goldman, he stresss that Egypt is in a particularly parlous state and facing the prospect of ever-increasing food importation.

“By 2030 Egypt will be needing the equivalent of 100 per cent of America’s entire wheat exports,” Archibald says.

Egypt’s population stands at 82 million, whose average age is 24-years. Nearly a third of its population is below 14 years of age; two-thirds are between 15-64 years; and fewer than five in 1,000 are over 65 years.

Egypt’s capital Cairo is a city of 11 million, followed by Alexandria with 4.4 million.

According to the American CIA’s World Fact Book, less than three per cent of Egypt’s land can be classified as arable. Natural hazards include periodic droughts, driving windstorms during spring called khamsin, as well as dust and sandstorms.